The idea of The Chinese Century has been around for a long time now. But a couple of articles that caught my eye recently make me think that the start of that century is well and truly upon us. The first:
America Is Suffering a Power Outage…and the Rest of the World Knows It
… Just as the Obama administration revised those anemic GDP growth rates downward, China’s economy was passing Japan’s to become the second largest on the planet. While the Chinese GDP is steaming ahead at an annual expansion rate of 10%, Japan’s is crawling at 0.4%.
China’s leaders responded to the 2008-2009 recession in the West that led to a fall in their country’s exports by quickly changing their priorities. They moved decisively to boost domestic demand and infrastructure investment by sinking money into improving public services.
While Western governments tried to overcome the investment slump at the core of the Great Recession indirectly through deficit spending, China raised its public expenditures through its state-controlled banks. They provided easy credit for the purchase of consumer durables like cars and new homes. In addition, the government invested funds in improving public services like health care, which had deteriorated in the wake of the economic liberalization of the previous three decades.
Altogether, these measures boosted the GDP growth rate to 9% in 2009, just when the American economy was shrinking by 2.6%. Such a performance impressed the leaders of many developing countries, who concluded that China’s state-directed model of economic expansion was far more suitable for their citizens than the West’s private-enterprise-driven one. …
Overall, the Great Recession in the West, triggered primarily by Wall Street’s excesses, provided an opportunity for Beijing to stress that, in socialist China, private capital had only a secondary role to play. “The socialist system’s advantages enable us to make decisions efficiently, organize effectively, and concentrate resources to accomplish large undertakings,” said Prime Minster Wen Jiabao in his address to the annual session of the National People’s Congress in March.
Hmmmm. Interesting counter example to all the small government rah rah free market (gimme tax cuts!) rhetoric we get from our resident right wingers. Anyway:
… More worrying to White House policymakers is the way Beijing is translating its economic muscle into military and diplomatic power. … By then, Beijing had locked horns with Washington, challenging the latter’s claim that the Yellow Sea is an international waterway, open to all shipping, including warships. This is an unmistakable sign that the Chinese Navy is preparing to extend its reach beyond its coastal waters. Indeed, plans are clearly now afoot to extend operations into the parts of the Pacific previously dominated by the U.S. Navy. …
Watch this space. On to the second article:
Amid Tension, China Blocks Vital Exports to Japan
Sharply raising the stakes in a dispute over Japan’s detention of a Chinese fishing trawler captain, the Chinese government has blocked exports to Japan of a crucial category of minerals used in products like hybrid cars, wind turbines and guided missiles.
Chinese customs officials are halting shipments to Japan of so-called rare earth elements, preventing them from being loading aboard ships at Chinese ports, industry officials said on Thursday.
I’ve written about “peak metals” here before. They are the rare minerals that are vital to the manufacture of all sorts of electronic equipment. They are running out. Fast. China controls the majority of the world’s reserves. And now they are starting to use that control as an economic weapon.
… China mines 93 percent of the world’s rare earth minerals, and more than 99 percent of the world’s supply of some of the most prized rare earths, which sell for several hundred dollars a pound. … The Chinese halt to exports is likely to have immediate repercussions in Washington. The House Committee on Science and Technology is scheduled on Thursday morning to review a detailed bill to subsidize the revival of the American rare earths industry.
How’s your Mandarin / Cantonese? How is New Zealand placed to fit in to The Chinese Century?